12 March 2018

March 31 and the end of the FBT year is around the corner, so to help taxpayers get things right, the ATO has made public the fringe benefits tax issues that attract its attention.

Broadly (not just in relation to FBT), the ATO says the following behaviours and characteristics tend to raise a red flag:

• tax or economic performance not comparable to similar businesses
• low transparency of tax affairs
• large, one-off or unusual transactions, including transfer or shifting of wealth
• tax outcomes inconsistent with the intent of tax law
• lifestyle not supported by after-tax income
• accessing business assets for tax-free private use
• poor governance and risk-management systems.

Continue reading “ATO Spells Out Its Big FBT Concerns” →

12 March 2018

Legislation that came into law in the last half of 2017 makes certain measures first announced with the 2017 Federal Budget now a reality.

The “housing tax integrity” bill solidifies the government’s intention to deny all travel deductions relating to inspecting, maintaining, or collecting rent for a residential investment property. As well, second-hand plant and equipment that came with an investment property are now off the table as far as depreciation goes.

The measures will apply from July 1, 2017, so will affect returns for the current financial year. However the changes to depreciation are dependent on when assets were purchased (more below).

Continue reading “Rental Property Owners Lose Some Deductions” →

12 March 2018

Single Touch Payroll is a government initiative to streamline business reporting obligations, which is due to become compulsory from 1 July 2018. When a business pays its employees, the payroll information will be sent to the ATO via the business’s payroll software.

Reporting under the Single Touch Payroll (STP) system removes the requirement to issue payment summaries, provide annual reports and tax file number declarations to the ATO. During the first year of its introduction, the ATO says employers will not be liable for a penalty for a late STP report.

Continue reading “Is your business prepared for Single Touch Payroll?” →

12 February 2018

You can now use your super to save for a deposit on a home and potentially save some money – by using the First Home Saver Super Scheme (FHSSS).

This blog post by Matthew Reid, Senior Accountant at i2 advisory gives an introduction and example of using the FHSSS.

Welcome to our first i2 advisory blog starting this 2018 year. We will be looking to roll out these informal and light-reading blogs on a regular basis to share tips and insights into a number of matters that may impact your business, personal/family finances and potential tax savings.

For many of us millennials, this new year (apart from starting a bit hazy) may have begun with some fresh new goals in mind for the year ahead. If, like me, the goal to knuckle down and save for that all important home deposit is on your to-do list (of perhaps you’re a parent who wants to enjoy an emptier nest), then this will hopefully take you in the right direction! The thought of saving up for a first home, at least to me, can be quite intimidating. Prioritising home deposit saving over spending can be a difficult mind shift, especially when the lure of overseas travel or a better car is always in the background. In addition, media speculation about the trend that the housing market is getting further and further out of reach and conjecture over what interest rates will do adds to the confusion and anxiety about when and how to break into the market. Fortunately, there has recently been some relief for us ‘young ones’ hoping to break out and possibly get into home ownership sooner, and it doesn’t have to involve 24 hour monitoring of the cryptocurrency movement.

Continue reading “Saving up for your first home? This strategy may help.” →

30 November 2017

Investment returns can be on revenue or capital account. Similarly investment expenditure could also be on revenue or capital account. The distinction between revenue and capital is not always clear and the characterisation of a receipt will ultimately depend on the circumstances that apply to the taxpayer.

The distinction between an income and capital receipt has been likened to the fruit and the tree, where the capital amount is the tree and the fruit being the return of income from the capital. Generally an income receipt is regarded as an amount that is regular, recurrent or periodic and income tax applies to a net amount of income. A good example is dividend returns from a shareholding.

Continue reading “Are Those Investment Returns on Revenue or Capital Account?” →

28 November 2017

A business becomes liable for fringe benefits tax where it provides car parking benefits in the form of a car parking facility for more than four hours on its premises to its employees, and the relevant car parking facility is situated within one kilometre of a commercial car park where the minimum all day cost is more than the current parking fringe benefit threshold ($8.66 a day for the 2017-18 FBT year).

• Note that this one kilometre is a radius, and “by the shortest practicable route, from a car entrance to those premises”. Also this can be travelled by any means, as long as this produces “the shortest practicable route”.

Continue reading “Small Business Car Parking FBT Exemption” →

28 November 2017

Historically, taxpayers may have been able to claim a deduction for the costs associated with setting up a business or raising finance, including the costs incurred in:

• establishing a company or other business structure
• converting a business structure to a different structure
• raising equity for the business
• defending it against a takeover
• unsuccessfully attempting a takeover
• stopping carrying on business (including liquidating a company).

Continue reading “Immediate Deductions for Start-up Costs” →

28 November 2017

Christmas will be here before we know it, with smarter business owners already planning their end-of-year festivities. Celebrating the season can be team-building or just a bit of fun, but the well-prepared business owner will also know that a little tax planning can help make sure there’s no unforeseen tax problems.

Continue reading “Tax and Christmas Party Planning” →

4 November 2017

Have you or someone you know considered taking up ride-sharing (also called ride-sourcing) to earn extra income, or even as an alternative form of employment? When providing ride-sharing services through Uber or GoCatch and other facilitators for a fare, there are things you will need to know, and traps you need to be aware of.

The first issue to make plain however depends on if you have already started offering ride-share services without considering the tax outcomes. If this is indeed the case, be pre-warned that come financial year’s end there’s a very real possibility that you may have built up a tax debt. Some drivers can be former salaried workers who don’t always realise how small business works (and may not even realise they are a small business now), and many think of sharing-economy services as “money on the side” without realising that tax rules still apply.

Continue reading “Considering ride-sharing for income? Tips and traps” →